This is a hypothetical question, with the intention of exploring the nature of wealth and standard of living.

By zero growth, I mean that the output of goods and services produced per person does not grow over time. However durable goods produced will start to accumulate hence improving the life conditions of people in this zero-growth world.

E.g. if society builds X number of houses per year for a fixed population, then people should in principle start having considerably more living space. At some point however the labor required to maintain all these houses will be more than the labour needed to build. Thus at some point the number of houses will not grow, because all labour is caught up in maintaining what already exists.

I would like to hear people's thoughts on what such an equilibrium would look like. Say society is technologically at 1900, and there is no technological progression. If we gave such a society say 200 years, how close could they get to our present western living standards?

One society to use for inspiration to think about this would be the Amish people. They are in a lot of ways stuck in the late 1800s, early 1900s. Their productivity and technology is not really advancing much, but they can still accumulate wealth in the form of furniture, houses, tools etc.

However the Amish population grows fairly rapidly so that keeps the role of inheritance limited. In my world one would have to imagine a sort of Amish society with stagnant population (each couple gets about two children).

$\begingroup$You might want to finish your question with a question. At the moment the question is in the title and the rest is musings on the nature of cross-generational wealth...$\endgroup$
– Joe BloggsDec 24 '18 at 1:47

$\begingroup$An economy is the sum of goods and services traded, regardless of living standards, regardless of how folks view wealth and inheritance and other cultural factors, regardless of productivity, and regardless of population change. While these variables do affect each other, the relationship is --in some cases-- quite weak. Also, readers generally find discussions of economy boring.$\endgroup$
– user535733Dec 24 '18 at 2:08

1

$\begingroup$I am thinking of GDP. GDP is the sum of products and services produced each year. To may knowledge it does not take into account wealth accumulation. While traveling I've felt on can sort of see this in practice. You can visit two countries with similar GDP, where one has had a high GDP for much longer. The historically rich country will tend to "look" richer. More impressive buildings, avenues etc. But say cars will look similar.$\endgroup$
– Adam SmithDec 24 '18 at 2:38

$\begingroup$The real Adam Smith would have never confused wealth and revenue. GDP measures revenue; one can be very wealthy and have little revenue, and one can have decent revenue but no wealth. And if GDP is not increasing, and the population is not decreasing, then you need a nifty definition for "standards of living" to make them look as if they were increasing.$\endgroup$
– AlexPDec 24 '18 at 15:27

$\begingroup$@AlexP Don't just assume people are idiots. It is more charitable to assume it is possible you misunderstood. I was in fact trying to point out specifically that economic growth and wealth accumulation was different things. I tried to clarify that by point out that I had GDP growth in mind. My subjective view of standard of living is that it is a combination of BOTH income and wealth. Or more accurately a combination of GDP per capita and wealth per capita. You can thus increase standard of living by increasing wealth per capita, even if GDP per capita stays fixed.$\endgroup$
– Adam SmithDec 24 '18 at 21:54

5 Answers
5

Let's assume your government has enough tech to guarantee the gender of each birth. This guarantees that your population is replaced but never grows — kinda. How do you deal with damage? disability? accident? plague? and how many other ways there are to deplete a society (I won't even mention war. Well, I won't mention it again...)? You can't have a stagnant society or it's one natural disaster away from dying. You need extras — and I don't mean the ability to quickly conceive a new baby, because you can't necessarily wait 20 years before they're trained to enter society. In this regard, some unemployment is actually necessary to guarantee avoiding degredation and chaos.

And then there's the issue of maintenance. It sure is cheaper to inherit — at least for the first generation. But with each passing year more of the house must be replaced — and it must be replaced at a faster rate as time passes. This non-linearity (the increasing rate of decay over time) means your static industry must increase supply over time until houses are replaced and just starting to decay again. That non-linearity means hiring more people, and then letting them go. Now you have either not enough people or too many, leading to not enough housing or too much, leading to (woo-hoo!) economic growth.

And heaven help you if one of your people has a really good idea ... and suddenly you're facing an industrial revolution. Perhaps this is your biggest problem, you can't have a static economy without having people who know just enough to get by, but no more. They had good ideas to get them where they are, but can't have any more or there will be change.

$\begingroup$It is a simplification to address a specific question. In my actually planned world, economic growth and technological development happens, just at a significantly slower pace than it actually did historically. Essentially my idea is to rather than letting the industrial revolution last about 200 years, it drags on for more like 500 years. The rational could be significantly smaller population. But really it could be anything: political dysfunction. Empire collapse, rising anti-intellectualism, backwards rulers etc.$\endgroup$
– Adam SmithDec 24 '18 at 22:06

$\begingroup$Aaaaahhhhh.... that makes more sense. That's OK though. The idea about population limitation would do it, but it might make more sense to slow gestation or reduce fertility. Chers!$\endgroup$
– JBHDec 24 '18 at 23:00

A house needs effort to maintain. A large house: commensurately moreso. The same is true of livestock, farmland, machinery or business empires: eventually you will hit an equilibrium of available work time to maintenance required and growth will halt.

If your people are happy living in the small house their parents left them then that’s ok, but then they don’t necessarily drive to add more value to the system they’re maintaining.

$\begingroup$I did in fact mention equilibrium towards the end. However I cannot remotely guess where that would be. I speculate that you could reach a sort of 1920s style middle class level. I also assume that such a society may chose over time to focus on building increasingly durable products to more easily be able to accumulate wealth.$\endgroup$
– Adam SmithDec 24 '18 at 2:29

$\begingroup$@Adam Smith : it’s wherever you peg it as an author, frankly. A freak breakthrough might boost the equilibrium up by several decades, or similarly an unfortunate death might retard it. It’s genuinely up to you.$\endgroup$
– Joe BloggsDec 24 '18 at 2:57

All mammals are curious, primates are more curious than most mammals, apes are more curious than the average primate, and humans are the most curious among all apes. We are natural innovators. We always strive to find something new to sell, be it a gadget, or an industrial process, or a service.

Consider for example Google, an American services company. Twenty years ago, many of the services Google sells did not exist. Nobody had thought of providing access to software applications as a service; there was no concept of selling the right to use virtual computers; there was no such thing a commercial operating system available for free in exchange for sharing mundane details of one's existence. By selling new services, Google makes a revenue of more than 100 billion American dollars per year.

Or consider those people who make revenue from videos posted on YouTube. Or those who make revenue from self-published electronic books on Amazon. And so on, and so forth. Zero economic growth means that humanity's ability to innovate has ended. We no longer crave the new, we no longer produce art, we no longer provide social services. Sad indeed, and not conducive to long term survival.

$\begingroup$20 years ago was just before 1999. I think you're overestimating Google's impact a great deal here. Commercial-style time-sharing of computers certainly existed in the 1980s, and quite likely well before that. Web applications were primitive by modern standards, but sure did exist; Web search engines were a well-established thing already in the mid-1990s. Getting a free copy of UNIX plus a "with love, Ken" note in, say, 1975, wasn't hard, at least in the US (though the computer was expensive). An OS in 1970 was just a tape (later, floppy) you got with the computer as part of the deal. Etc...$\endgroup$
– a CVn♦Dec 25 '18 at 15:59

$\begingroup$@aCVn: Services. I did not say that Google made any great advances in technology; I said that they innovated in providing new services. And renting a virtual private server is fundamentally different from buying computer time. I should know, I'm more than old enough to remember the excitement of AltaVista, the first honest for real search engine.$\endgroup$
– AlexPDec 25 '18 at 18:25

No

Your society is either at equilibrium right from the beginning, or will backslide slowly(or not so slowly). There is no incentive to develop new tools and technologies, the things that make living standards improve, if people only want to reuse infinitely what they already have. For example, why would Karl Benz put into production his automobiles if he knows for a fact that people would never acknowledge its advantages over horses?

Your scenario is counter to human nature, since there's always somebody somewhere who would think "Can't we do better than this?". In order to slow or completely suppress the march of technology in the manner you prescribe you'd need some kind of overriding force like a powerful theocracy that actively promotes a fear of the new. The urge to science is simply too powerful otherwise.

$\begingroup$My assumption is NOT that people don't want improvement, rather that there are not enough scientists/engineers to rapidly improve technology. Thus there is still an incentive to make more stuff, it just won't be of any higher quality or technical sophistication. Take the early 1900s. Only a few people had cars. Even if car technology did not improve, if you let a fixed population build such cars for over a 100 years, one would assume that quite a large portion of the population may eventually own a car.$\endgroup$
– Adam SmithDec 24 '18 at 2:34

$\begingroup$@AdamSmith That kind of development bottleneck is implausible without having either external intervention like alien abductions or changing human nature itself.$\endgroup$
– nullpointerDec 24 '18 at 2:42

$\begingroup$@Adam Smith: And indeed, after a century we come to a point where most people own cars, but only a small fraction of the population enjoys a standard of living that allows them to own horses :-)$\endgroup$
– jamesqfDec 24 '18 at 6:05

$\begingroup$@nullpointer I don't understand why you think that is implausible. Why is a world with fewer scientists and engineers implausible? Any number of things could have caused that: Smaller total population, cultural developments which are anti-science (seen that in medieval times), anti-science and progress leadership (seen that in imperial China and Japan historically). The enlightenment and scientific revolution was a rather unique European experience. The British industrial revolution actually spread rather slowly.$\endgroup$
– Adam SmithDec 24 '18 at 22:11

Alice owns a nice car. Couple of years old, well maintained, should be good for another 100k miles even if it would be depreciated for tax purposes if it belonged to a company.

One day there is an accident and the nice car is now a wreck. Because Alice cannot afford a new car, she goes to Bob and buys a new motor scooter. Bob sells her a motor scooter and because his inventory is now low he orders another one from the factory. The factory employs workers and buys parts.

In another reality, Alice did not have her accident. She still uses the car and saves her money for a rainy day.

In the latter scenario, Alice is considerably better off. Yet it is the first scenario where more is added to the gross domestic product. So economic growth might me a misleading statistic for the overall wealth and happiness of a society.

Also consider another scenario:

Alice and Bob work for Carol, copying files in the office. They make 1.000 whatever currency per month for a 40-hour work week. Somebody comes around and invents a mechanical typewriter. Alice and Bob can now produce neat copies twice as fast.

Great, says Carol. I'll fire Bob and let Alice do the work alone. Let Bob go home and twiddle his thumbs. Or look for a new job, undercutting other jobseekers in the market.

In another reality, Carol cuts both Alice's and Bob's weekly hours to 20, at the same salary.

In yet another reality. Carol lets Alice to the typing and tells Bob to proof-read everything, thus reducing errors.

The first option would reduce the gross domestic product. The second and third would keep it unchanged. I guess the second option would make Alice and Bob most happy ...

$\begingroup$Your first example is a case of the broken window fallacy. In the first reality Alice had to spend money on a new motor scooter and so couldn't spend that money on other things which would also have contributed to economic growth. Vice versa, in the second reality, while she wouldn't have bought a new vehicle she would have used that money to buy something else.$\endgroup$
– AngelPrayDec 24 '18 at 14:37

$\begingroup$@AngelPray, if Alice had spent that money on something else, she would have had that something plus her car. So the "net wealth" of society went down by the accident.$\endgroup$
– o.m.Dec 25 '18 at 9:47

$\begingroup$I agree, but you claim that "Yet it is the first scenario where more is added to the gross domestic product", this is not the case. Not if you account for the fact that, as I said, Alice will buy other things instead of a new scooter.$\endgroup$
– AngelPrayDec 25 '18 at 13:50

$\begingroup$@AngelPray, good point. The easiest way out is to modify the other option -- Alice does not consume on alternate priorities, she keeps the money in her wallet.$\endgroup$
– o.m.Dec 25 '18 at 14:59